New KPMG report for British American Tobacco, Imperial Tobacco,
Japan Tobacco International and Philip Morris International confirms
sustained rates of illegal tobacco trade across the EU
LONDON--(BUSINESS WIRE)--May 28, 2015--
The scale of the illegal trade in cigarettes remains sizeable in the
European Union (EU), with a total of 56.6 billion illegal cigarettes
consumed in 2014, representing 10.4% of total consumption, according to
the latest annual report by KPMG. This illegal market costs taxpayers
and communities more than €11 billion a year in lost tax revenue. If
combined, the thousands of transactions made by criminals involved in
the illegal tobacco trade would equate to them being the fifth largest
cigarette supplier to EU consumers.
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The source and type of products available on the illegal tobacco market
have continued to evolve, while the upward trend of illegal trade levels
in the EU has moderated in recent years. For example, in 2014, more than
8 out of 10 illegal cigarettes originated from outside the EU, which is
a 10% increase compared to 2013. In contrast, flows within the EU
continue to decline, driven by improved industry supply chain controls
and narrowing price gaps between EU Member States.
“Overall levels of illicit cigarette consumption in the EU remained
essentially flat during 2014, however the illegal tobacco market
remains sizeable and continues to evolve. Our research shows that while
this is a problem that touches every Member State, caution is needed
particularly in countries that share borders with non-EU countries where
cigarettes are cheaper and where we continue to see high illicit
cigarette consumption levels,” commented Robin Cartwright, a Partner
at KPMG.
“Illicit whites” - cigarettes that are generally produced legally in a
country but are smuggled into other countries where they have limited or
no legal distribution - are also proliferating across the EU. According
to KPMG, while smuggling of well-known brands has become less common,
the number of illicit whites has grown exponentially from virtually zero
in 2006 to 37% of all illegal cigarettes in 2014.
The illegal cigarette market continues to deprive Member States of much
needed revenues, hurts legitimate businesses, and fosters crime in local
communities. Eliminating the illegal tobacco industry requires
governments, law enforcement agencies, manufacturers, and retailers to
work together to stop the criminals responsible for this illegal trade.
British American Tobacco (BAT), Imperial Tobacco Group (Imperial), Japan
Tobacco International (JTI) and Philip Morris International (PMI) remain
committed to these efforts and together with law enforcement continue to
invest in combating this problem.
Additional findings in the report include:
-
Illicit whites brand flows grew by 8% to 21.1 billion cigarettes in
2014, with consumption of such products being most prevalent in Poland,
Italy, Spain and Greece;
-
In 2014, 10.4% of all cigarettes consumed in the EU were illegal,
compared to 10.5% in 2013 and 11.1% in 2012;
-
Total illicit cigarette volumes declined by 3.3% in 2014 to 56.6
billion cigarettes.
The 2014 KPMG study on the illicit cigarette market in the EU,
Switzerland and Norway is available on KPMG’s website: http://kpmg.com/UK/en/IssuesAndInsights/ArticlesPublications/Pages/the-illicit-cigarette-market.aspx
NOTES TO EDITORS
KPMG Study on the illicit cigarette consumption in the EU:
KPMG has conducted this study every year since 2006, as part of the
Cooperation Agreement between Philip Morris International, the European
Commission and the EU Member States. Since 2013, the study has been
commissioned by all four major tobacco manufacturers –BAT, Imperial, JTI
and PMI.
The study is the only comprehensive annual measurement of the black
market for cigarettes in the EU. Access to a wider set of data sources,
as well as methodology improvements in line with feedback received from
external stakeholders, have allowed KPMG to further refine the
completeness of the analysis over the years. The study’s methodology is
presented in detail in the report.
About KPMG LLP:
KPMG LLP undertakes economic analysis, commissioned by the tobacco
industry, in a variety of jurisdictions. The OECD considers the
methodology of KPMG LLP the “most authoritative assessment of the level
of counterfeit and contraband cigarettes” in the EU. KPMG LLP recognises
the wider public policy context within which governments decide
regulatory and fiscal changes for the tobacco industry, and that the
analysis in this report only considers one aspect. KPMG LLP expresses
herein no view, nor makes any recommendation, in relation to future
policy for the industry in this regard.
About British American Tobacco plc:
British American Tobacco is a global tobacco Group with brands sold in
more than 200 markets.
It employs more than 57,000 people worldwide and has over 200 brands in
its portfolio, with its cigarettes chosen by one in eight of the world’s
one billion smokers. Alongside offering tobacco products, British
American Tobacco is committed to offering safer nicotine alternatives to
adult smokers. As such, it was the first tobacco company to launch an
e-cigarette in the UK. www.bat.com
About Imperial Tobacco Group PLC:
Imperial Tobacco Group PLC is a multi-national tobacco company
headquartered in the UK, with international strength in cigarettes and
world leadership in fine cut tobacco, premium cigars, rolling papers and
tubes. The Group has 44 manufacturing sites and around 33,000 employees
and operates in over 160 markets.
About JTI:
JTI, a member of the Japan Tobacco Group of Companies, is a leading
international tobacco manufacturer. It markets world-renowned brands
such as Camel, Winston and Mevius. Other global brands include Benson &
Hedges, Silk Cut, Sobranie, Glamour and LD. With headquarters in Geneva,
Switzerland, and about 26,000 employees worldwide, JTI has operations in
more than 120 countries. Its core revenue in the fiscal year ended
December 31, 2014, was USD 11.9 billion. For more information, visit www.jti.com.
About Philip Morris International Inc:
Philip Morris International Inc. (PMI) is the leading international
tobacco company, with six of the world's top 15 international brands,
including Marlboro, the number one cigarette brand worldwide. PMI's
products are sold in more than 180 markets. In 2014, the company held an
estimated 15.6% share of the total international cigarette market
outside of the U.S., or 28.6% excluding the People's Republic of China
and the U.S. For more information, see www.pmi.com.

View source version on businesswire.com: http://www.businesswire.com/news/home/20150528005560/en/
Source: British American Tobacco plc and Imperial Tobacco Group plc and JTI and Philip Morris International Inc
KPMG
(for enquiries on the research and methodology)
Jessica
Liebmann
Tel: +44 (0) 20 7311 3245
Email: Jessica.Liebmann@kpmg.co.uk
or
BAT
Press Office
Will Hill / Anna Vickerstaff
+44 (0) 20 7845
2888 (24 hours)
email: press_office@bat.com
or
Imperial
Tobacco Group PLC
Iain Watkins
+ 44 117 933 7481
or
JTI
Press Office
email: pressoffice@jti.com
T:
+41 22 703 0291
or
Philip Morris International Press Office
email:
media@pmi.com
T:
+41 58 242 4500